UK asset managers ‘backtracked on climate resolutions at oil major AGMs’

Some of the UK’s largest investors have been accused of backtracking on their support for a climate resolution at oil majors’ annual general meetings this year.

Shareholder activist group Follow This said on Monday that asset managers such as Legal & General, abrdn, Janus Henderson, Schroders and Aviva have voted against their resolution at several 2023 meetings when they had previously supported it.

The Dutch group puts forward a resolution at AGMs each year calling for oil majors to align their climate strategy with targets set out by the Paris Agreement.

HSBC Asset management is the only large British investor who voted for the resolution involving Shell, BP, TotalEnergies, Chevron and ExxonMobil in 2023.

Legal & General, abrdn and Janus Henderson voted against the resolution at US oil companies Chevron and ExxonMobil this year, having previously voted for it in previous years, according to Follow This.

Schroders voted for the resolution at UK companies Shell and BP in 2022 but did not support it at the firms’ AGMs this year.

Aviva only voted for the resolution at ExxonMobil this year, having previously backed it at Shell and Chevron in 2022 as well.

Follow This founder Mark van Baal said current windfall profits represent a once-in-a-lifetime opportunity to invest in new business models in renewable energy.

Instead he said that Shell, BP, Total, Exxon and Chevron are using votes against their climate resolutions to justify postponing emissions cuts, which conflicts with the goal of Paris to limit global warming to 1.5C.

He added that Paris will fail unless the oil industry changes, which is a decision for shareholders.

Mr van Baal told the PA news agency: “It’s not a choice between climate and profit but it’s a choice between change and inaction.

“The oil majors obviously don’t want to change. They want to cling on to their business model as long as possible and we know that they do that already for decades.

“They managed to talk investors into this false dilemma that they have to chose between profit and climate, but you can do both.”

Legal & General said it backs the Follow This proposal’s basic principles but its wording imposes inflexibility on companies that is challenging to justify at the moment.

A spokesperson said: “We fundamentally reject the assertion from Follow This about sacrificing Paris for short-term profits.

“Climate change is one of the defining issues of our time. In recognition of its potentially catastrophic outcomes for the world – and the financial materiality to our clients’ assets – we proactively use our voice and support efforts to align the global economy with a 1.5C pathway.”

The firm said it had supported 70% of shareholder resolutions on climate by the end of May 2023 and its voting record demonstrates its commitment to holding companies to account for failing to address climate risks.

Aviva referred to its voting record for 2023, which said the resolution did not add any value or a strong case was not made at Shell and Chevron AGMs.

Andrew Mason, head of active ownership at abrdn, said: “We are supportive of the spirit of the resolution and the achievement of the Paris Climate Agreement.

“However, the resolution does not fully account for the ongoing engagement abrdn has had with investee companies or the steps already being taken by companies to address climate change.

“abrdn is committed to work with investee companies to achieve GHG reductions.

“We are transparent on our approach – the voting decisions that have been taken and why these decisions have been reached are publicly available on our website.”

A Schroders spokesperson said: “Every resolution is a specific ask of a specific company which we assess through our own fundamental research.

“Our approach is therefore tailored to each company context and we consider each shareholder resolution in detail.

“We have been actively engaging with oil majors for decades and our nuanced approach has led us to support the Follow This resolution at Chevron and Exxon, where we agreed there was a lack of ambitious net zero commitments and targets, but not at the European oil majors, which are aiming to transition to net zero business models and have set interim targets covering the use of their energy products.”

PA also contacted Janus Henderson for comment.